Astec Industries to Sell GEFCO, Inc.
1725 Shepherd Road | Chattanooga, TN 37421 | Phone (423) 899-5898 | Fax (423) 899-4456
ASTEC INDUSTRIES TO SELL GEFCO, INC.
• Accelerates Business Transformation and Aligns with Strategy to Simplify the Organization
• Increases Focus on Core Higher Margin Businesses
• Further Strengthens Financial Flexibility to Invest in Growth Opportunities
CHATTANOOGA, Tenn. (December 9, 2019) – Astec Industries, Inc. (Nasdaq: ASTE) announced today that it intends to sell its GEFCO, Inc. subsidiary, located in Enid, Oklahoma. GEFCO produces drilling equipment for water wells, geothermal wells, and cathodic protection; high-pressure double pumpers for energy services; and King Oil Tools for oil & gas and other applications. The GEFCO businesses contributed approximately $50 million in annualized revenue and the divestiture is expected to eliminate related annual operating losses and be accretive to annualized EPS. The divestiture process is in early stages and management expects to conclude the transaction by the end of June 2020.
“As part of a thorough strategic review of our product portfolio, we determined that divestiture of GEFCO enhances shareholder value and aligns with our vision for the future of Astec Industries,” stated Barry Ruffalo, CEO of Astec Industries, Inc. “We are in the process of finding a buyer for GEFCO’s businesses. The transaction will further our strategy to simplify the organization, strengthen our financial position and release additional capital to deploy toward future growth opportunities. While the transaction is expected to enhance shareholder value, we remain mindful of the approximately 150 GEFCO employees that may be affected by the divestiture.”
Vince Trotta, President of GEFCO stated, “We would like to thank our employees for their dedication over the years and want to provide as much advanced notice as possible. We have enjoyed our relationship with Astec Industries and look forward to the possibility of becoming part of an organization that more broadly participates and invests in the markets we serve. We hope such a buyer would retain our employees for its operations. In the event that is not the case, we will assist with job searches, unemployment registration, and other benefits.”
Use of Proceeds
The proceeds of the transaction will be invested in future growth opportunities aligned with our disciplined capital allocation process. The company will provide further details about its capital allocation strategy with fourth quarter and full-year 2019 results in late-February 2020.
About Astec Industries, Inc.
Astec Industries, Inc., (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building; aggregate processing; oil, gas and water well drilling and concrete production. Astec's manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and equipment for the extraction and production of fuels and water drilling equipment (Energy Group).
The information contained in this press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.
For Additional Information Contact:
Steve Anderson Vice President, Director of Investor Relations & Corporate Secretary
Phone: (423) 899-5898
Fax: (423) 899-4456